Nunavut diamond mine owners owe $2M for cleanup costs

The owner of the Jericho mine site in Nunavut has failed to pay millions of dollars to ensure the clean up of the former site.

Officials have not been able to contact Shear Diamonds since October

The owner of the Jericho mine site in Nunavut has failed to pay millions of dollars to ensure the cleanup of the former site.

Shear Diamonds disappeared last fall, after unexpectedly closing up the Jericho site. Jericho was Nunavut's first diamond mine.

Shear still hasn't declared bankruptcy, but it now seems the federal government may be stuck with the clean-up and taxpayers stuck with the bill.

Under the terms of its water license, Shear Diamonds should have posted a security bond of $3.4 million — that's money held by the Department of Aboriginal Affairs and Northern Development to pay for a clean-up in the event the company goes bankrupt.

Prime Minister Stephen Harper, right, poses with then-Indian and Northern Affairs Minister Jim Prentice, left, and Tahera Diamond CEO Peter Gillin, in front of the mining pit before the official opening of the Jericho Diamond Mine project on Thursday, August 17, 2006, in Nunavut. Shear Diamonds bought the mine in 2010 after Tahera went bankrupt. (CP PHOTO/Jeff McIntosh)

In an email to CBC News, federal government spokesperson Genevieve Guibert said Shear Diamonds still owes more than $2 million. Guibert said they expect the company to live up to its financial obligations.

However, that seems increasingly unlikely.

A letter from the federal government to the Nunavut Impact Review Board last month said federal officials haven't succeeded in making any contact with Shear Diamonds since October.

Ryan Barry, the board's executive director, said the federal government is now in a grey area.

"At some point they will have to make a determination whether the company has in fact completely defaulted and can't, you know, the site isn't about to be put back into operation. And they might have to make a call between continued care and maintenance and full closure," said Barry.

Guibert said the federal government is monitoring the situation. She said Shear Diamonds is still the mine's operator, and the company remains accountable for safety at the site.

A recent report from the Commissioner of the Environment and Sustainable Development found weaknesses in the way the federal government collects security bonds. It found that three of the 11 mines in Nunavut had security shortfalls totaling almost $11 million.